Income-tax Act, 1961 — S. 147, S. 148, S. 263. When CIT has after considering the explanations offered by the assessee dropped the proposed proceedings u/s.263, the AO has no locus standi to issue notice u/s.148 on the same set of facts.

44 2010 TIOL 350 ITAT (Bang.)

A.Y. : 1988-89. Dated : 13-5-2010

The total income of the assessee was originally assessed u/s.143(3) of the Act. The CIT proposed a revision u/s.263, but later on dropped the same accepting the explanations offered by the assessee-company. The reasons which prompted the CIT to issue notice u/s.263 were regarding technical know-how fees, cash assistance and duty draw-back, consideration of doubtful debts for the deduction u/s.32AB and matter regarding deduction u/s.80I. The reasons recorded by the Assessing Officer (AO) for issuing notice u/s.148 and the reasons reflected in the notice u/s.148 were nothing else but the very same issues considered by the CIT for the purpose of S. 263 proceedings. The AO having issued notice u/s.148 completed the assessment u/s.143(3) r.w. S. 147 of the Act.

Aggrieved, the assessee preferred an appeal to the CIT(A) challenging the validity of reassessment proceedings and contending that the reassessment is bad in law and void ab initio. The CIT(A) upheld the order passed by the AO.

Aggrieved, the assessee preferred an appeal to the Tribunal where it contended that when the CIT has dropped the proposed proceedings u/s.263 on arriving at the satisfaction of the explanations offered by the assessee-company, the AO has no locus standi to issue notice u/s.148 on the same set of issues and thereafter to frame an assessment u/s147.

Held :

The Tribunal noted that in A.Y. 1987-88 on similar facts and circumstances, a similar issue had arisen in the case of the assessee and the Tribunal had in that case found that the Madras High Court has in the case of CIT v. Ramachandra Hatcheries, (305 ITR 117) (Mad.) considered the same legal issue i.e., whether S. 147 action is permissible in a case where proceedings u/s.263 had already been dropped. The Madras High Court has in the said case held that the AO has no jurisdiction to reopen an assessment u/s.147 so as to circumvent the order of the CIT passed u/s.263, which had become final unless and until the order was set aside by any process known to law.

The Tribunal also noted that when a Co-ordinate Bench has already passed an order on an issue it has to follow the said order of the Co-ordinate Bench unless the facts are different or new questions of law have been raised or new materials have been placed. If the facts and circumstances are the same and the law considered the same and the materials placed before the Tribunal are also the same, the Tribunal has to follow the earlier decision of the Co-ordinate Bench as that is the mandate of rule of judicial precedence and that of judicial discipline. If the Tribunal does not follow the earlier decision of the Co-ordinate Bench without valid reasons, it would be an onslaught of the Rule of Law. Not to follow the order of the Co-ordinate Bench would be ridiculed as a pompous show of self-righteousness. That is why the Supreme Court has in the case of Union of India v. Raghubir Singh, (178 ITR 548) (SC) has held that the Tribunal has to follow its own decision and should not differ from its earlier view simply because a contrary view is possible.

The Tribunal following the order for A.Y. 1987-88 held the reopening of assessment made by AO to be bad in law and set aside the order passed by the AO u/s.143(3) r.w. S. 147 of the Act.